Anger at the root of mortgage default problem, study finds

Memo to the bank: Take this money-sucking, underwater house and shove it! Go ahead and wreck my credit for years to come. I’m walking away, no matter what.

Why?

That’s the question posed by Brent T. White, a University of Arizona law professor whose academic paper last year on the fast-spreading “strategic default” phenomenon drew sharp criticism from lenders and Wall Street, who viewed him as the Pied Piper of the walk-away movement.

Now White has published a paper based on the personal accounts of 356 strategic defaulters and homeowners on the verge of doing the same. His finding: People who intentionally default on their loans are not as economically rational or calculating in their decision-making as widely thought.

In fact, he said, their decisions to pull the plug “may not turn out to be economically rational.” But they walk anyway, in large part because they are at the end of their emotional rope. They have transitioned from feelings of anxiety and hopelessness to outright anger at their lenders, the government and a financial system they consider unfair.